The Government has been told it can sue French bank Societe Generale over allegations it missold financial products to Northern Rock that partly led to the UK firm’s collapse, the Telegraph reports.
According to the Telegraph, the New York Supreme Court has ruled that Northern Rock Asset Management should be allowed to take legal action against Societe Generale for misselling $34m (£20m) of mortgage products before the financial crisis hit.
Lawyers told the paper the case would help clear the way for the Government to take action against other institutions that played a part in its collapse.
Bruce Grace, a lawyer at Lewis Baach – the law firm representing the Government in the case – says the ruling will make it difficult for banks to use fine print in marketing material to dodge their responsibilities.
He says: “That is a typical argument that the banks make in these deals. They look at the fine print and say you shouldn’t have relied on anything that was in any of the marketing material. Here is a really powerful example of the court rejecting that.
“It shows the court’s distaste for the type of argument the bank is making.”